Sie = ?
How do you know what to translate "sie" into? How do you know when to translate to "sie" instead of some other word?
Sie (capitalized) is a formal 'you' like usted in Spanish. It is used for people you address as Herr or Frau, i.e, it shows formality and politeness. While du is the informal you like the tú in Spanish. However, to differentiate between sie (she) and sie (they), it is really up to context. There is no sure shot of telling either apart.
> sie haben eine Zeitung. [They have a newspaper.] (Pay attention to the verb here; usually German verbs that end in (-en) are used for multiple persons like trinken (drink), essen (eat), lesen(read))
> sie sind Männer. [They are men.] (The German verb 'sein' (to be) also signifies which 'sie' we are dealing with to some extent. As it is sind in the case of multiple persons or when a formal Sie is used but ist in the case of a singular sie (she))
> sie ist eine Frau. [She is a woman.]
> sie trinkt die Milch. [She drinks the Milk.]
Sie can be "you", "she", "you all" or "they".
When it is "she", the verb changes. So "She has" is "Sie hat".
For all other forms (you/y'all/they) it's the full verb like "She haben". When it's at the beginning of a sentence, there is no way to tell which one it is (and it appears duolingo will accept any) other than context.